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What is aviation fuel tax?

Holly Young
January 18, 2024

Ever wondered why a flight is so much cheaper than taking the train? Time to wrap your head around fuel tax.

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The vapor trails from a plane seen against a cloudy sky
Campaigners say a fuel tax would help curb the demand for flyingImage: Douglas E. Walker/Design Pics/picture alliance

You pay fuel tax when you fill up your car or ride a train, but not when you take a plane. Unlike other modes of transport, the aviation industry has largely escaped this tax burden.

But since flying is the most carbon-intensive form of transport, environmental campaigners argue it's high time aviation fuel taxes took off.

What exactly is fuel tax and how does it work?

It is a government tax on the sale of fuels such as gasoline and diesel used in transportation — although the rate differs from country to country.

If you own a car, you likely already pay a chunk of tax when fueling up — in the EU it is an average of $1.76 (€ 1.6) per gallon of diesel, compared to an average of around $0.60 (€0.55) in the US. Income generated from this levy can theoretically be invested in road and railway infrastructure, or in more eco-friendly public transportation. Whether this actually happens varies.

But unlike road and rail fuels, kerosene — used to power aircraft — is exempt from taxation on all international flights around the world.

This privileged status dates back to the Chicago Convention, a 1944 international UN treaty which, in a bid to support the fledgling aviation industry, sought to protect airlines from the burden of any potential double levy by banning the taxation of fuel on board a plane in the country where it lands.

In many instances, this means there is no taxation on fuel at all. The European Union, for example, prohibits fuel tax on international flights taking off from countries within the bloc. Although the EU allows taxation on domestic flights, no member states have so far committed to this.

Last year a proposed kerosene tax on domestic flights in Germany was criticized by the aviation industry and swiftly replaced by an increased ticket tax.

What difference would taxing air travel make?

With the aviation industry currently responsible for 2% of annual global energy-related emissions, flying less would contribute to slowing the temperature rise that is causing climate change. Yet as things stand, global demand for flying is predicted to grow, with some estimates saying emissions could triple by 2050.

An aviation fuel tax, proponents say, could be just the ticket to make us stop and think about how — and how frequently we travel.

Campaigners argue fuel taxes would also raise huge amounts of revenue that could be put towards decarbonizing the economy.

Given that only 1% of the world's population is responsible for more than half of aviation emissions, a fuel tax that raised ticket prices for wealthy frequent fliers would also mean polluters would be footing the bill for their environmental impact.

Is an aviation fuel tax likely to be introduced?

Without a fuel tax, which would increase the price of plane tickets, environmental campaigners say air traffic and the emissions it generates will continue to grow. It also leaves little incentive for the industry to invest in technologies such as clean fuels or zero-emission aircraft.

But there are signs the push for aviation fuel taxes is gaining momentum.

US Democratic politicians Senator Edward Markey and Congresswoman Nydia Velazquez have put forward legislation to raise fuel taxes on private jets — which pollute up to 14 times more than commercial flights per passenger — while in Europe the EU's climate commissioner Wopke Hoekstra has proposed a global tax on kerosene.

Edited by: Tamsin Walker